Interpretation of open interest (OI) & price change of a stock
Based on open interest & price change data of a stock, the price trend of the stock is correlated as:
Price |
Open Interest |
Price trend |
Increase |
Increase |
Increase (More buyers & long build-up) |
Increase |
Decrease |
Increase (Short positions covering) |
Decrease |
Increase |
Decrease (More short positions build-up) |
Decrease |
Decrease |
Decrease (Long unwinding Buyers become sellers) |